One the biggest problems facing the cattle industry today is the lack of a systematic and integrated method of breeding and marketing cattle to suit the expressed needs of cattle buyers. Although the beef industry is U.S. agriculture's largest sector, it is one of the least efficient. In an attempt to correct this problem, there is a growing trend in the beef industry to apply concepts such as consolidation, vertical integration, production to specification and valued-based marketing to improve beef production efficiency, product quality, and consistency among particular brands and/or types of cattle.
Consumer demand for predictably safe, healthy and tasty beef product is the catalyst for this trend. In response to consumer demand, the beef cattle industry is attempting to shift to a branding concept that utilizes an integrated production system. Integrated branded beef systems typically consist of two or more business partners, each representing a single phase of production, i.e., breeding, production, feeding, slaughter, processing, or retail. Cattlemen and beef industry business leaders are forming such partnerships to develop branded beef products. The attempt to create an integrated branded beef system, however, is typically impeded by a number of factors present in the cattle industry. For example, due to the large number of independent cattle producers with stock of varied genetic backgrounds, there is significant variation in quality and other characteristics within the supply of feeder cattle available for finishing and harvesting. Thus, even cattle purchased from the same supplier may vary significantly in quality and characteristics.
Another significant challenge facing the cattle industry is its organization. Beef production systems typically consist of multiple owners and profit centers. Due to the number of participants in the production process, it is difficult to maintain any level of consistency and/or brand identity. Furthermore, cattle buyers and producers (suppliers) are typically limited in their purchasing and marketing options. Historically, producers have offered their cattle for sale only to a limited number of buyers either privately or through an auction. If the cattle are sold privately, the producer normally prices the cattle and the buyers either offer a counter-bid or accept the producer's offer. However, buyers are limited because it is often difficult to participate in numerous private sales. In an auction, the producer is typically at the mercy of a limited number of buyers that bid on the cattle offered. If a limited number of buyers attend the auction, then the producers may be forced to accept the auction price, even if they could have obtained a higher price elsewhere.
Another significant challenge caused by the existing industry structure is that information feedback is very limited. Producers rarely learn how their animals performed in the feeding and harvesting phases. Without that feedback, producers do not have the information they need to make changes in their genetics, and implement management systems to better meet the needs of the integrated branded beef programs.
Therefore there is a need for an integrated system that allows cattle producers and buyers to interact in a manner that facilitates consistent and reliable cattle production.